The amyloid-beta 42 (Abeta42) peptide has been suggested to promote tau phosphorylation and toxicity in Alzheimer's disease (AD) pathogenesis; however, the underlying mechanisms are not fully understood. Using transgenic Drosophila expressing both human Abeta42 and tau, we show here that tau phosphorylation at Ser262 plays a critical role in Abeta42-induced tau toxicity. Co-expression of Abeta42 increased tau phosphorylation at AD-related sites including Ser262, and enhanced tau-induced neurodegeneration. In contrast, formation of either sarkosyl-insoluble tau or paired helical filaments was not induced by Abeta42. Co-expression of Abeta42 and tau carrying the non-phosphorylatable Ser262Ala mutation did not cause neurodegeneration, suggesting that the Ser262 phosphorylation site is required for the pathogenic interaction between Abeta42 and tau. We have recently reported that the DNA damage-activated Checkpoint kinase 2 (Chk2) phosphorylates tau at Ser262 and enhances tau toxicity in a transgenic Drosophila model. We detected that expression of Chk2, as well as a number of genes involved in DNA repair pathways, was increased in the Abeta42 fly brains. The induction of a DNA repair response is protective against Abeta42 toxicity, since blocking the function of the tumor suppressor p53, a key transcription factor for the induction of DNA repair genes, in neurons exacerbated Abeta42-induced neuronal dysfunction. Our results demonstrate that tau phosphorylation at Ser262 is crucial for Abeta42-induced tau toxicity in vivo, and suggest a new model of AD progression in which activation of DNA repair pathways is protective against Abeta42 toxicity but may trigger tau phosphorylation and toxicity in AD pathogenesis.